Page 46 - U.S. FOREIGN CORRUPT PRACTICES ACT

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

Chapter 3
The FCPA:
Accounting Provisions

THE FCPA: ACCOUNTING PROVISIONS

In addition to the anti-bribery provisions, the FCPA contains accounting provisions applicable

to public companies. The FCPA’s accounting provisions operate in tandem with the anti-

bribery provisions 219 and prohibit off-the-books accounting. Company management and

investors rely on a company’s financial statements and internal accounting controls to

ensure transparency in the financial health of the business, the risks undertaken, and the
transactions between the company and its customers and business partners. The accounting

provisions are designed to “strengthen the accuracy of the corporate books and records

and the reliability of the audit process which constitute the foundations of our system of
corporate disclosure.” 220

The accounting provisions consist of two accounting provisions, are discussed in greater

primary components. First, under the “books and detail below.
records” provision, issuers must make and keep Although the accounting provisions were
books, records, and accounts that, in reasonable originally enacted as part of the FCPA, they do not
detail, accurately and fairly reflect an issuer’s apply only to bribery-related violations. Rather,
transactions and dispositions of an issuer’s the accounting provisions require that all public
assets. 221 Second, under the “internal controls” companies account for all of their assets and

provision, issuers must devise and maintain a liabilities accurately and in reasonable detail, and
system of internal accounting controls sufficient they form the backbone for most accounting fraud
to assure management’s control, authority, and issuer disclosure cases brought by DOJ and
and responsibility over the firm’s assets. 222 SEC. 223
These components, and other aspects of the
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